Recent figures issued by HMRC should be seen as a warning flag to businesses currently using customs warehousing to gain relief on customs revenue. A staggering 80% increase in revocations signals a huge issue with businesses failing to satisfy the complex legal requirements for relief.
The figures also showed that two thirds of new applications were rejected and highlighted a considerable gap between applications and approvals, suggesting many get dropped along the way.
Adam Wood, Commercial Director of Barbourne Brook commented:
“Customs warehousing is an efficient way for businesses to gain significant relief on customs costs, but in our experience companies underestimate the investment needed to set up and operate customs warehouses.
They fail to gain a clear understanding of the potential customs savings and the set-up costs associated before proceeding. There is no evidence to support the ROI decision.”
HMRC is clearly clamping down on those businesses that haven’t done the work required to satisfy the requirements for customs warehousing relief and with a startling number of revocations it’s likely that will continue.
Wood continued:
“Businesses need to prepare for the fact that relief that they are currently benefiting from may not meet legal requirements and prepare for investigation in this area. A better understanding of the investment needed to get customs warehousing right and a realistic take on potential savings can point to other more efficient ways making customs savings.”
Barbourne Brook has analytic tools that can help businesses put a solid number on the benefit of customs warehousing. Often there is a more cost-effective way of achieving the same or similar level of savings, such as inward processing and the re-classification of goods.
Before investing, it makes commercial sense to find the best-fit solution.
Where customs warehousing is the most efficient way forward, there are many options on ways to implement and operate – each with its pros and cons, initial investment and ongoing cost implications. Correct configuration is critical in making a successful application – and errors are most likely the reason behind the high revocation rate.
Contact Us
If you are interested in customs warehousing and want to avoid these potential pitfalls contact Adam on 01905 914031 for a no obligation conversation.
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